A Multi-Agent, Multi-Attribute Policy Model for Analyzing the Adoption of Energy Efficiency Technologies

Alan H. Sanstad, Lawrence Berkeley National Laboratory
John A. "Skip" Laitner, U.S. Enviromental Protection Agency, Office of Atmospheric Programs

Keywords

Abstract

Understanding and modeling the complexities of technology adoption decisions by consumers and firms is vital for designing and implementing effective policies to promote the diffusion of energy efficiency, renewables, and other environmentally-friendly technologies. Such decisions are a function of a range of factors that may influence economic agents’ evaluations of costs and benefits, including information regarding technology characteristics, evaluation of potential co-benefits, and the influence of government policies. Moreover, differences among agents’ decision rules can have a significant impact on the market outcomes of technology adoption. Such factors, however, are typically omitted in simulation models based on the assumptions of representative agents, cost minimization under perfect information, and competitive market equilibrium.

This paper applies a heuristic model of technology adoption in which a heterogeneous population of agents makes decisions regarding electricity supply or energy efficiency technologies subject to distributions of characteristics and decision rules influencing individual cost-benefit calculations. We show that this approach can provide an enhanced understanding of the policy-relevant complexities of technology adoption.